IT stocks extended losses for a fourth consecutive trading session on Thursday, even as the broader market advanced, with investors continuing to reduce exposure to the sector amid weak growth guidance, concerns over artificial intelligence-led disruption and cautious client spending.
The NSE Nifty IT Index declined 2.2%, compared with a 0.8% gain in the benchmark NSE Nifty 50. The continued decline has pushed the Nifty IT Index more than 40% below its all-time high reached in December 2024.
Persistent Systems led the losses among major IT stocks, falling 4.46%. Coforge declined 2.50%, Oracle Financial Services Software slipped 2.49%, HCLTech fell 2.40% and Tech Mahindra dropped 2.28%. Wipro was the only stock in the chart to trade marginally higher, rising 0.14%.
The sharp divergence between the broader market and technology stocks reflects mounting concerns over slowing growth, weaker demand visibility and structural changes in the global technology spending cycle.
Weak Guidance
Pressure on IT stocks has increased after major technology companies issued softer revenue guidance for FY27, signalling slower growth and weaker client spending trends in key overseas markets.
Investors have reacted negatively to concerns that discretionary spending by US-based clients remains under pressure amid inflation and uncertainty around interest rates. Delayed rate cuts in the US have kept companies cautious on technology spending, particularly on large transformation projects.
The sector has also faced concerns over lower spending on traditional software maintenance and legacy services, areas that historically generated a significant share of revenue for Indian IT firms.
AI Shift
Market participants have increasingly focused on the impact of generative artificial intelligence on traditional IT services models.
Concerns have emerged that AI tools could replace portions of human-intensive work, reducing billing growth for outsourcing firms. Investors fear this could result in lower revenue expansion as companies deliver more services at reduced pricing levels.
Clients are also redirecting technology budgets towards AI infrastructure, hardware and automation capabilities instead of conventional software services, adding to concerns around future demand for traditional IT outsourcing work.
Global Sentiment
Broader global developments have also weighed on sentiment towards the sector.
Rising geopolitical tensions in West Asia and a wider risk-off mood across global markets have prompted foreign investors to trim exposure to equities, including technology shares.
The sustained selling pressure has left the IT sector among the weakest-performing segments of the market over recent trading sessions.
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